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EXHIBIT 10.5 The form of severance agreement for executive officers
effective as of July 1, 1993.
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Severance Agreement
THIS AGREEMENT between RYDER SYSTEM, INC., a Florida corporation (the
"Corporation"), and ____________________________ (the "Executive"), dated as of
the _______day of _____________________, 19_____.
WITNESSETH:
WHEREAS, the Executive is an officer and/or key employee of the Corporation
and/or its subsidiaries or affiliates and an integral part of its management;
and
WHEREAS, in order to retain the Executive, the Corporation desires to
provide severance benefits to the Executive if the Executive's employment with
the Corporation or its subsidiaries or affiliates terminates as provided herein
prior to a Change of Control (as defined in Section 2);
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, it is hereby agreed by and between the Corporation and the
Executive as follows:
1. Term of Agreement. This Agreement shall become effective as of
the date hereof and shall terminate upon the occurrence of the earliest of the
events specified below; provided, however, that Section 5 shall survive
termination:
(a) the last day of the Severance Period (as defined in
Section 3(e));
(b) the termination of the Executive's employment by the
Executive for any reason or by the Corporation or its subsidiaries or
affiliates for Death, Disability or Cause (as defined in Sections 3(b) and (a)
respectively);
(c) one (1) year following the date of receipt of a mailing
(by registered or certified mail, return receipt requested) or hand delivery to
the Executive by the Corporation of written notice of its intent to terminate
this Agreement, provided that the Executive is not then receiving severance pay
and benefits pursuant to Section 4 as a result of his termination by the
Corporation or its subsidiaries or affiliates other than for Death, Disability
or Cause (as defined in Sections 3(b) and (a) respectively) prior to the end of
the one (1) year period;
(d) a Change of Control of the Corporation (as defined in
Section 2), provided that the Executive is not then receiving severance pay and
benefits pursuant to Section 4 as a result of his termination by the
Corporation or its subsidiaries or affiliates other than for Death, Disability
or Cause (as defined in Sections 3(b) and (a) respectively) prior to the Change
of Control;
(e) the material breach by the Executive of the provisions of
Section 5;
(f) the termination of this Agreement pursuant to Section
4(a)(i) or Section 4(a)(iii)(II).
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Additionally, notwithstanding anything in this Agreement to the
contrary, if the Executive should die while receiving severance pay or benefits
pursuant to Section 4 as a result of his termination by the Corporation or its
subsidiaries or affiliates other than for Death, Disability or Cause (as
defined in Sections 3(b) and (a) respectively), this Agreement shall terminate
immediately upon the Executive's death and both parties shall be released from
all obligations under this Agreement other than those under Section 5(b)(II)
and those relating to amounts or benefits which are payable under this
Agreement within five (5) business days after the Executive's Date of
Termination (if not yet paid), are vested under any plan, program, policy or
practice or which the Executive is otherwise entitled to receive upon his
death, including but not limited to, life insurance. Any payment due pursuant
to the preceding sentence upon the Executive's death shall be made to the
estate of the deceased Executive, unless the plan, program, policy, practice or
law provides otherwise.
2. Change of Control. For the purpose of this Agreement, a "Change
of Control" shall be deemed to have occurred if:
(a) a third person, including a "group" as defined in Section
13(d)(3) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), but excluding any employee benefit plan or plans of the Corporation and
its subsidiaries and affiliates, becomes the beneficial owner, directly or
indirectly, of twenty percent (20%) or more of the combined voting power of the
Corporation's outstanding voting securities ordinarily having the right to vote
for the election of directors of the Corporation; or
(b) the individuals who, as of June 26, 1987, constituted the
Board of Directors of the Corporation (the "Board" generally and as of June 26,
1987, the "Incumbent Board") cease for any reason to constitute at least
two-thirds (2/3) of the Board, or in the case of a merger or consolidation of
the Corporation, do not constitute or cease to constitute at least two-thirds
(2/3) of the board of directors of the surviving company (or in a case where
the surviving corporation is controlled, directly or indirectly, by another
corporation or entity do not constitute or cease to constitute at least
two-thirds (2/3) of the board of such controlling corporation or do not have or
cease to have at least two-thirds (2/3) of the voting seats on any body
comparable to a board of directors of such controlling entity or, if there is
no body comparable to a board of directors, at least two-thirds (2/3) voting
control of such controlling entity), provided that any person becoming a
director (or, in the case of a controlling non-corporate entity, obtaining a
position comparable to a director or obtaining a voting interest in such
entity) subsequent to June 26, 1987 whose election, or nomination for election,
was approved by a vote of the persons comprising at least two-thirds (2/3) of
the Incumbent Board (other than an election or nomination of an individual
whose initial assumption of office is in connection with an actual or
threatened election contest, as such terms are used in Rule 14a-11 of
Regulation 14A promulgated under the Exchange Act) shall be, for purposes of
this Agreement, considered as though such person were a member of the Incumbent
Board; or
(c) there is a liquidation or dissolution of the Corporation or a
sale of all or substantially all of its assets.
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If the Corporation enters into an agreement or series of
agreements or the Board passes a resolution which will result in the
occurrence of any of the matters described in Subsections (a), (b) or (c),
and the Executive's employment is terminated subsequent to the date of
execution of such agreement or series of agreements or the passage of such
resolution, but prior to the occurrence of any of the matters described in
Subsections (a), (b) or (c), then, upon the occurrence of any of the
matters described in Subsections (a), (b) or (c), a Change of Control shall
be deemed to have retroactively occurred on the date of the execution of
the earliest of such agreement(s) or the passage of such resolution.
3. Certain Definitions.
(a) Cause. The Executive's employment may be
terminated for Cause only if the Corporation's Chief Executive Officer
determines that Cause (as defined below) exists. For purposes of this
Agreement, "Cause" means (i) an act or acts of fraud, misappropriation, or
embezzlement on the Executive's part which result in or are intended to
result in his or another's personal enrichment at the expense of the
Corporation or its subsidiaries or affiliates, (ii) conviction of a felony,
(iii) conviction of a misdemeanor involving moral turpitude, or (iv)
willful failure to report to work for more than thirty (30) continuous days
not attributable to eligible vacation or supported by a licensed
physician's statement. For the purposes of this Section 3(a), any good
faith interpretation by the Corporation of the foregoing definition of
"Cause" shall be conclusive on the Executive.
(b) Death or Disability.
(i) The Executive's employment will be
terminated by the Corporation or its subsidiaries or affiliates
automatically upon the Executive's death ("Death").
(ii) After having established the Executive's
Disability (as defined below), the Corporation may give to the Executive
written notice of the Corporation's and/or its subsidiaries' or affiliates'
intention to terminate the Executive's employment for Disability. The
Executive's employment will terminate for Disability effective on the
thirtieth (30th) day after the Executive's receipt of such notice (the
"Disability Effective Date") if within such thirty (30) day period after
such receipt the Executive shall fail to return to full-time performance of
his duties. For purposes of this Agreement, "Disability" means disability
which after the expiration of more than twenty-six (26) weeks after its
commencement is determined to be total and permanent by a licensed
physician selected by the Corporation or its insurers and reasonably
acceptable to the Executive or his legal representative.
In the event of the Executive's termination for Death or
Disability, the Executive and, to the extent applicable, his legal
representatives, executors, heirs, legatees and beneficiaries shall have no
rights under this Agreement and their sole recourse, if any, shall be under
the death or disability provisions of the plans, programs, policies and
practices of the Corporation and/or its subsidiaries and affiliates, as
appropriate.
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(c) Notice of Termination. Any termination by the Corporation
or its subsidiaries or affiliates other than for Death shall be communicated by
a Notice of Termination to the Executive hereto given in accordance with
Section 9(b). For purposes of this Agreement, a "Notice of Termination" means
a written notice which (i) indicates the specific termination provision in this
Agreement relied upon, (ii) sets forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the Executive's
employment under the provision so indicated, and (iii) if the Date of
Termination (as defined below) is other than the date of receipt of such
notice, specifies the termination date (which date shall be not more than
fifteen (15) days after the giving of such notice or, in the event of
Disability, the Disability Effective Date).
(d) Date of Termination. Date of Termination means the date
of receipt of the Notice of Termination or any later date specified therein, as
the case may be; provided, however, that if the Executive's employment is
terminated by reason of Death or Disability, the Date of Termination shall be
the date of Death of the Executive or the Disability Effective Date, as the
case may be.
(e) Severance Period. Unless terminated sooner pursuant to
Section 1, the Severance Period means the period set forth below depending on
the Executive's management level at the time the Notice of Termination was
given, which period shall begin on the day following the Executive's Date of
Termination:
Mgmt. Level 19 or above Three (3) years
Mgmt. Level 15-18 Two (2) years
Mgmt. Level 14 One (1) year and six (6) months
Mgmt. Level 13 One (1) year
Mgmt. Level 12 Nine (9) months
Mgmt. Level 11 Six (6) months
4. Obligations of the Corporation.
(a) Circumstances of Termination.
(i) If, during the term of this Agreement prior to a
Change of Control, the Corporation or its subsidiaries or affiliates shall
terminate the Executive's employment for any reason other than for Death,
Disability or Cause, the Corporation agrees to provide the Executive with
compensation, benefits and perquisites in accordance with the terms and
provisions set forth in Subsection (iii) below and the other provisions of this
Agreement, and the Executive agrees that he shall be subject to such terms and
provisions. The Executive shall not be deemed to have terminated his
employment with the Corporation or any of its subsidiaries or affiliates, and
thus shall not be entitled to any amounts or benefits pursuant to this
Agreement, if he leaves the employ of the Corporation or any of its
subsidiaries or affiliates for immediate reemployment with the Corporation or
any of its subsidiaries or affiliates. Additionally, notwithstanding anything
in this Agreement to the contrary, the Executive shall
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not be entitled to any amounts or benefits pursuant to this Agreement if,
as a result of the sale of all or substantially all of the stock or assets
of one or more of the Corporation's subsidiaries or affiliates not
constituting a Change of Control, the Executive continues as an employee of
any of the companies whose stock or assets were sold or the Executive
leaves the employ of the Corporation or any of its subsidiaries or
affiliates and the Executive (A) is offered employment with the purchasing
company or any of its subsidiaries or affiliates, or (B) is offered
continuing employment with the Corporation or any of its remaining
subsidiaries or affiliates. In the event of the occurrence of any of the
events set forth in the preceding sentence, this Agreement shall terminate
immediately and the Executive shall not be entitled to any amounts or
benefits hereunder; provided, however, that this Agreement shall continue
in effect if the Executive accepts the offer of continuing employment with
the Corporation or any of its remaining subsidiaries or affiliates.
(ii) If during the term of this Agreement, the
Executive shall terminate his employment with the Corporation or its
subsidiaries or affiliates for any reason, or the Corporation or its
subsidiaries or affiliates shall terminate the Executive's employment for
Death, Disability or Cause, then the Executive shall not be entitled to any
of the benefits set forth in Subsection (iii) below or in any other
provision of this Agreement, except to the extent of the amounts which
represent vested benefits or which the Executive is otherwise entitled to
receive under any plan, program, policy or practice of the Corporation or
any of its subsidiaries or affiliates at or subsequent to the Executive's
Date of Termination.
(iii) If the Executive is entitled to receive
severance pay and benefits under Subsection (i) above, the Corporation
agrees to provide the Executive with the following compensation, benefits
and perquisites, subject to Section 5(b):
(I) Cash Entitlement. The Corporation shall
pay to the Executive the aggregate of the amounts determined
pursuant to clauses a through e below:
a. Unpaid Salary and Vacation. If
not already paid, the Executive's base salary and unused vacation
entitlement through the Executive's Date of Termination at the
rate in effect at the time the Notice of Termination was given.
b. Salary Multiple. A continuation
of the Executive's annual base salary at the rate in effect at the
time the Notice of Termination was given ("Annual Base Salary")
for the Executive's applicable Severance Period (as defined in
Section 3(e)).
c. Bonus Multiple. An amount equal
to the product of (i) the Executive's Annual Base Salary
multiplied by (ii) the stated maximum bonus opportunity percentage
available to the Executive under the respective incentive
compensation plan immediately preceding the Notice of Termination
multiplied by (iii) the "Executive's Three Year Average Bonus
Percentage" (as defined below) (the product of (i), (ii) and (iii)
hereinafter referred to as the "Bonus Opportunity") multiplied by
(iv) the following
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multiple depending on the Executive's management level at the time the
Notice of Termination was given:
Mgmt. Level 17 or above 1
Mgmt. Level 11-16 0
The "Executive's Three Year Average Bonus Percentage" is the sum
of the bonus percentages paid to the Executive divided by the stated
maximum bonus opportunity percentages available to the Executive rounded to
one decimal place (e.g., 86.3%) for each of the three (3) fiscal years
immediately preceding the date the Notice of Termination was given divided
by three (3).
If the Executive has been employed by the Corporation and/or its
subsidiaries or affiliates for less than three (3) fiscal years at the time
the Notice of Termination was given, or if the Executive was not eligible
to receive an incentive compensation award pursuant to an incentive
compensation plan of the Corporation and/or its subsidiaries or affiliates
for one (1) or more of the three (3) fiscal years immediately preceding the
date the Notice of Termination was given, the bonus percentage to be
applied in the "Executive's Three Year Bonus Percentage" calculation for
any year in which the Executive was not employed or eligible to receive an
incentive award will be the average bonus percentage paid for such year to
all executives in the Corporation or the Executive's respective division,
as appropriate, with a stated maximum bonus opportunity level similar to
that of the Executive at the date the Notice of Termination was given
divided by the average stated maximum bonus opportunity percentage
available to these executives for such year rounded to one decimal place
(e.g., 86.3%).
CALCULATION EXAMPLE OF EXECUTIVE'S THREE YEAR AVERAGE
BONUS PERCENTAGE
(1) (2)
Stated (1)/(2)
Bonus Maximum Bonus
Percentage Bonus Opportunity
Year Paid Opportunity Percent
---- ---------- ----------- -----------
1 55.1% 60.0% 91.8%
2 71.8% 80.0% 89.8%
3 102.0% 100.0% 102.0%
------
Sum 283.6%
Executive's Three Year Average
Bonus Percentage (Sum divided by 3) 94.5%
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d. Tenure - Related Bonus. An
amount equal to the product of the Bonus Opportunity determined in
clause c above multiplied by the number of the Executive's full
and prorated partial years of service with the Corporation and/or
its subsidiaries or affiliates, subject to a maximum of twelve
(12) years, divided by twelve (12).
e. Prior Year Bonus. If bonuses
for the calendar year prior to the Executive's Date of Termination
have been distributed and the Executive has not yet been paid his
incentive compensation award for such calendar year, and his Date
of Termination is subsequent to the incentive compensation award
payment date for such calendar year, then the Executive shall
receive an additional amount equal to the product of the actual
salary earned by the Executive during the prior calendar year
multiplied by the actual bonus percentage approved for the
Executive for such calendar year under the respective incentive
compensation plan.
The Executive agrees that he shall not be
eligible for or entitled to any other incentive compensation
award, including any pro rata incentive compensation award,
pursuant to the Corporation's and/or its subsidiaries' or
affiliates' incentive compensation plans. The Executive's
agreement to this provision is a material consideration for the
Corporation's executing this Agreement.
The Corporation shall pay to the
Executive the amounts determined in clauses a through e above as
follows:
Clause a: In a lump sum no later than
the next normal pay period for the Executive, unless otherwise
required by law.
Clause b: In equal semi-monthly
installments on the fifteenth and last day of each month during
the Severance Period.
Clause c: No later than the first March
1st following the Executive's Date of Termination.
Clauses d and e: In a lump sum within
five (5) business days after the Executive's Date of Termination.
(II) Medical, Dental, Disability, Life
Insurance and Other Similar Plans and Programs. Until the
earliest to occur of (i) the last day of the Severance Period,
(ii) the date on which the Executive becomes eligible for the
designated coverage as an employee of another employer which
provides or offers such coverage to its employees, or (iii) in the
case of benefits requiring employee contributions, the date the
Executive fails to make such contributions pursuant to the
Corporation's or the plan's instructions or otherwise cancels his
coverage in accordance with plan provisions (the "Benefits
Continuation Period"), the Corporation shall continue to provide
all benefits which the
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Executive and/or his family is or would have been entitled to receive under
all medical, dental, disability, supplemental life, group life, and
accidental death and dismemberment insurance plans and programs, and other
similar plans and programs of the Corporation and/or its subsidiaries or
affiliates not otherwise provided for in this Agreement, in each case on a
basis providing the Executive and/or his family with the opportunity to
receive benefits at least equal to those benefits provided by the
Corporation and/or its subsidiaries or affiliates for the Executive under
such plans and programs if and as in effect at the time the Notice of
Termination was given whether or not such plans or programs were in effect
at the time of the execution of this Agreement. The non-contributory
benefits will be paid for by the Corporation. The medical and dental plan
benefits, to the extent applicable, will be provided in accordance with the
provisions of the Consolidated Omnibus Budget Reconciliation Act of l985,
as amended ("COBRA"), except that the Corporation shall pay the COBRA
premiums for the standard medical and dental plan benefits during the
Benefits Continuation Period. If the Executive's participation in any such
plan or program is barred by COBRA or for any other reason, the Corporation
shall pay or provide for payment of such benefits or substantially similar
benefits to the Executive and/or his family. Failure of the Executive to
accept available coverage from another employer or to notify the
Corporation, in writing, within thirty (30) days of the Executive's
eligibility for coverage under another employer's plan shall terminate the
Severance Period and this Agreement immediately, and the Corporation shall
have no further obligations to the Executive under this Agreement;
provided, however, that the Executive will, if applicable, continue to be
subject to the provisions of Section 5 of this Agreement. Upon termination
of his coverage under this paragraph, the Executive may be eligible under
COBRA to continue some of his benefits for an additional period of time.
Additionally, the Executive has thirty-one (31) days from the last day of
coverage in which to convert his group life insurance to an individual
policy. The Executive must arrange for conversion through an agent of The
Prudential Insurance Company of America, or such other insurance company as
is then providing coverage.
(III) Car. a. If, at the time the Notice of
Termination was given, the Executive was assigned a car and was in
management level 14 or above, within five (5) business days after the
Executive's Date of Termination, the Corporation shall transfer to the
Executive free and clear title to the car assigned to the Executive at the
time the Notice of Termination was given.
b. If, at the time the Notice of Termination was given,
the Executive was assigned a car and was in management level 13 or below,
then the following provisions will apply:
If the Executive has less than one (1) full year of service with
the Corporation and/or its subsidiaries or affiliates, the Executive shall
have no right to purchase or receive from the Corporation the car assigned
to the Executive at the time the Notice
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of Termination was given since the Executive shall have no rights
under this Agreement pursuant to Section 4(c).
If the Executive has one (1) or more but fewer than five
(5) full years of service with the Corporation and/or its
subsidiaries or affiliates, the Executive may purchase from the
Corporation free and clear title to the car assigned to the
Executive at the time the Notice of Termination was given for
fifty percent (50%) of the average retail value of the car listed
in the National Automobile Dealer's Association, Official Used Car
Guide as of the date of the purchase.
If the Executive has completed five (5) or more full years
of service with the Corporation and/or its subsidiaries or
affiliates, the Corporation shall transfer to the Executive free
and clear title to the car assigned to the Executive at the time
the Notice of Termination was given.
Purchase arrangements and title transfer must be completed
within five (5) business days after the Executive's Date of
Termination.
c. The Executive shall not be entitled to
any car telephone provided by the Corporation or its subsidiaries
or affiliates and such car telephone, if applicable, shall be
returned to the Corporation immediately upon title transfer. The
Executive will be responsible for the sales tax on transfer as
well as for all insurance, maintenance, taxes and other
liabilities associated with the car after title transfer.
Additionally, the Corporation shall assign to the Executive all
claims for breach of warranty and other similar matters against
the vendor and manufacturer of the car. The Executive agrees to
accept such car in an "As-Is" condition. THE EXECUTIVE WAS SOLELY
RESPONSIBLE FOR THE SELECTION AND MAINTENANCE OF THE CAR AND
THEREFORE ACKNOWLEDGES THAT THE CORPORATION DOES NOT MAKE ANY
WARRANTY OR REPRESENTATION, EITHER EXPRESS OR IMPLIED, WITH
RESPECT TO THE CAR, INCLUDING, BUT NOT LIMITED TO THE CONDITION OR
DESIGN OF THE CAR, ANY LATENT DEFECTS OF THE CAR, THE
MERCHANTABILITY OF THE CAR OR ITS FITNESS FOR ANY PARTICULAR
PURPOSE.
d. Notwithstanding the Executive's
management level, if the Executive was receiving a car allowance
at the time the Notice of Termination was given, the Corporation
shall pay to the Executive, in a lump sum within five (5) business
days after the Executive's Date of Termination, an amount equal to
the product of the Executive's monthly car allowance in effect at
the time the Notice of Termination was given multiplied by 12
multiplied by the following multiple depending on the Executive's
management level at the time the Notice of Termination was given:
Mgmt. Level 19 or above 3
Mgmt. Level 15-18 2
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Mgmt. Level 14 1.5
Mgmt. Level 13 1
Mgmt. Level 12 .75
Mgmt. Level 11 .5
(IV) Outplacement. Until the end of the Severance
Period or until the Executive obtains another full-time job, whichever
occurs first, the Corporation shall provide the Executive with professional
outplacement services of the Corporation's choice and shall reimburse the
Executive for documented incidental outplacement expenses directly related
to job search such as resume mailing, interviewing trips, and clerical
support, subject to a maximum cost of the lesser of (i) ten percent (10%)
of the Executive's Annual Base Salary (as defined in clause (I)b above), or
(ii) $20,000 if the Executive was in management level 11-19 at the time the
Notice of Termination was given or $30,000 if the Executive was above
management level 19 at the time the Notice of Termination was given. The
Executive shall not be entitled to receive cash in lieu of the professional
outplacement services provided by the Corporation.
(V) Perquisite, Country Club and Financial
Planning/Tax Preparation Allowances. For the twelve (12) month perquisite,
country club and financial planning/tax preparation payment period of the
Corporation or the Executive's respective division, as appropriate (i.e.,
January - December or September - August), in which the Notice of
Termination was given, if not yet paid, and one (1) additional twelve (12)
month period thereafter, but in no event for longer than the Severance
Period, the Corporation shall continue to provide the Executive with the
perquisite, country club and financial planning/tax preparation allowances,
as appropriate, the Executive would have been entitled to receive under the
plans, programs, policies and practices of the Corporation and/or its
subsidiaries or affiliates (subject to the Corporation's receipt of
appropriate documented evidence of such expenses), in each case on a basis
providing the Executive with an opportunity to receive benefits at least
equal to those provided by the Corporation and/or its subsidiaries or
affiliates for the Executive under such plans, programs, policies and
practices if and as in effect at the time the Notice of Termination was
given.
(VI) Split-Dollar Life Insurance and Deferred
Compensation. Notwithstanding anything in the applicable agreements, plans
or policies to the contrary, if the Executive is covered by the
Corporation's split-dollar life insurance with its attendant deferred
compensation benefit at the time the Notice of Termination is given, and
the Executive wishes to retain both the life insurance coverage and its
future deferred compensation benefit, the Executive may purchase the policy
from the Corporation by paying the Corporation an amount equal to the cash
value of the policy. If the Executive elects to purchase the policy from
the Corporation, the Executive will have all the benefits inherent in
ownership of the whole-life policy, including the cash value of the policy.
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If the Executive wishes to retain the life insurance
coverage only, the Executive may convert the policy by forfeiting
the deferred compensation benefit. If the Executive chooses this
alternative, the Corporation will transfer ownership of the policy
to the Executive, and contemporaneously the Executive will execute
an agreement relinquishing the deferred compensation benefit.
This alternative transfers the entire cash value of the policy to
the Executive and relieves the Corporation of the administrative
record-keeping associated with the Executive's deferred
compensation benefit.
The Executive must notify the Corporation of his election
for the transfer of his split-dollar life insurance policy and
deferred compensation benefit within thirty (30) days following
the Executive's Date of Termination and the Corporation shall
complete the transfer immediately upon receipt of such notice and
the required payment or executed agreement.
(b) If a Change of Control occurs and the Executive
is then receiving severance pay and benefits pursuant to Section 4(a) as a
result of his termination by the Corporation or its subsidiaries or
affiliates other than for Death, Disability or Cause prior to the Change of
Control, the Corporation shall pay to the Executive in a lump sum, within
five (5) business days after the Change of Control, an amount (in lieu of
future periodic payments) equal to the present value of all future cash
payments due to the Executive under this Agreement (including the maximum
outplacement and perquisite, country club and financial planning/tax
preparation allowances, as appropriate) using the First National Bank of
Boston's base or prime commercial lending rate then in effect for such
computation. The Corporation and the Executive shall continue to be liable
to each other for all of their other respective obligations under this
Agreement.
(c) Notwithstanding anything in this Agreement to the
contrary, no amount shall be paid or payable under this Agreement unless
the Executive has been employed by the Corporation and/or its subsidiaries
or affiliates for at least twelve (12) consecutive months at the time of
his termination. In the event the Executive is employed for less than
twelve (12) consecutive months, the Executive hereby agrees that he shall
not receive or be entitled to anything under this Agreement.
5. Obligations of the Executive.
(a) Covenant of Confidentiality. All documents,
records, techniques, business secrets and other information of the
Corporation, its subsidiaries and affiliates which have or will come into
the Executive's possession from time to time during the Executive's
affiliation with the Corporation and/or any of its subsidiaries or
affiliates and which the Corporation treats as confidential and proprietary
to the Corporation and/or any of its subsidiaries or affiliates shall be
deemed as such by the Executive and, shall be the sole and exclusive
property of the Corporation, its subsidiaries and affiliates. The
Executive agrees that the Executive will keep confidential and not divulge
to any other party any of the Corporation's or its subsidiaries' or
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affiliates' confidential information and business secrets, including, but not
limited to, such matters as costs, profits, markets, sales, products, product
lines, key personnel, pricing policies, operational methods, customers,
customer requirements, suppliers, plans for future developments, and other
business affairs and methods and other information not readily available to the
public. Additionally, the Executive agrees that upon his termination of
employment, the Executive shall promptly return to the Corporation any and all
confidential and proprietary information of the Corporation and/or its
subsidiaries or affiliates that is in his possession.
(b) If, at any time during the term of this Agreement, the
Corporation or its subsidiaries or affiliates shall terminate the Executive's
employment for any reason other than for Death, Disability or Cause, and the
Executive shall elect to receive severance pay and benefits in accordance with
Section 4, the Executive shall be subject to the following additional
provisions:
(I) Covenant Against Competition. During the Severance
Period, the Executive shall not, without the prior written consent
of the Corporation's Chief Executive Officer, directly or
indirectly engage or become a partner, director, officer,
principal, employee, consultant, investor, creditor or stockholder
in any business, proprietorship, association, firm or corporation
not owned or controlled by the Corporation or its subsidiaries or
affiliates which is engaged or proposes to engage or hereafter
engages in a business competitive directly with the business
conducted by the Corporation or any of its subsidiaries or
affiliates in any geographic area where such business of the
Corporation or its subsidiaries or affiliates is conducted;
provided, however, that the Executive is not prohibited from
owning one percent (1%) or less of the outstanding capital stock
of any corporation whose stock is listed on a national securities
exchange.
During the Severance Period, the Executive shall not, either on
the Executive's own account or for any person, firm or company,
solicit, interfere with or induce, or attempt to induce, any
employee of the Corporation or any of its subsidiaries or
affiliates to leave his employment or to breach his employment
agreement, if any.
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(II) Release. Upon his termination of employment,
the Executive shall execute a release agreement in the
form attached as Exhibit A and, to the extent applicable,
a resignation letter in the form attached as Exhibit B,
prior to and as a condition to receiving any payments or
benefits pursuant to this Agreement.
(c) Specific Remedy. The Executive acknowledges and
agrees that if the Executive commits a material breach of the Covenant of
Confidentiality (Subsection (a) above) or the Covenant Against Competition
(clause (I) of Subsection (b) above), the Corporation shall have the right
to have the covenant specifically enforced by any court having appropriate
jurisdiction on the grounds that any such breach will cause irreparable
injury to the Corporation, and that money damages will not provide an
adequate remedy to the Corporation. The Executive further acknowledges and
agrees that the Covenant of Confidentiality and, if applicable, the
Covenant Against Competition contained in this Agreement are fair, do not
unreasonably restrict the Executive's future employment and business
opportunities, and are commensurate with the compensation arrangements set
out in this Agreement. In addition, once the Executive makes an election
to receive severance pay and benefits pursuant to Section 4 and is subject
to Subsection (b) above, the Executive shall have no right to return any
amounts or benefits that are already paid or to refuse to accept any
amounts or benefits that are payable in the future in lieu of his specific
performance of his obligations under Subsection (b) above.
6. Non-exclusivity of Rights. Nothing in this Agreement
shall prevent or limit the Executive's continuing or future participation
in any benefit, bonus, incentive or other plans, programs, policies or
practices provided by the Corporation or any of its subsidiaries or
affiliates and for which the Executive may qualify, nor shall anything
herein limit or otherwise affect such rights as the Executive may have
under such plans, programs, policies or practices or under any stock option
or other agreements with the Corporation or any of its subsidiaries or
affiliates, specifically including but not limited to the Ryder System,
Inc. 1980 Stock Incentive Plan, the deferred compensation agreements, the
Corporation's and/or its subsidiaries' or affiliates' retirement, 401(k)
and profit sharing plans, the Ryder System, Inc. Benefit Restoration Plan,
supplemental disability and retiree life insurance. In the event there are
any amounts which represent vested benefits or which the Executive is
otherwise entitled to receive under these or any other plans, programs,
policies or practices, including any plan, program, policy or practice
adopted after the execution of this Agreement, of the Corporation or any of
its subsidiaries or affiliates at or subsequent to the Executive's Date of
Termination, the Corporation shall cause the relevant plan, program, policy
or practice to pay such amount, to the extent not already paid, in
accordance with the provisions of such plan, program, policy or practice.
The phrase "Termination Date" as used in the Ryder System, Inc. 1980 Stock
Incentive Plan shall mean the end of the Severance Period with respect to
Non-Qualified Stock Options granted to the Executive, if any, pursuant to
such plan, and the Executive's Date of Termination with respect to
Incentive Stock Options and Restricted Stock Rights granted to the
Executive, if any, thereunder. The last day of the Severance Period will
be considered to be the Executive's termination date for purposes of the
Executive's deferred compensation agreement(s), if any.
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7. No Mitigation. In no event shall the Executive be obligated to
seek other employment by way of mitigation of the amounts payable to the
Executive under any of the provisions of this Agreement nor, except as
specifically provided otherwise in this Agreement, shall the amount of any
payment provided for under this Agreement be reduced by any compensation or
benefits earned by the Executive as the result of employment by another
employer after the Date of Termination, or otherwise.
8. Assignment. This Agreement is personal to the Executive and the
Executive does not have the right to assign this Agreement or any interest
herein. This Agreement shall inure to the benefit of and be binding upon the
Corporation and its successors.
9. Miscellaneous. (a) This Agreement shall be governed by and
construed in accordance with the laws of the state of Florida, without
reference to principles of conflict of laws. The captions of this Agreement
are not part of the provisions hereof and shall have no force or effect. This
Agreement may not be amended or modified otherwise than by a written agreement
executed by the parties hereto or their respective successors and legal
representatives.
(b) All notices and other communications hereunder shall be in
writing and shall be given by hand delivery to the other party or by registered
or certified mail, return receipt requested, postage prepaid, addressed as
follows:
If to the Executive: at the Executive's last address appearing in
the payroll/personnel records of the Corporation.
If to the Corporation:
Ryder System, Inc.
3600 N.W. 82nd Avenue
Miami, Florida 33166
Attention: General Counsel
or to such other address as either party shall have furnished to the other in
writing in accordance herewith. Notice and communications shall be effective
when actually received by the addressee.
(c) The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement.
(d) The Executive understands and acknowledges that the
payments and benefits provided to the Executive pursuant to this Agreement may
be unsecured, unfunded obligations of the Corporation. The Executive further
understands and acknowledges that the payments and benefits under this
Agreement, including but not limited to the cash payments, the car, the
outplacement, and the split-dollar life insurance, may be compensation and as
such may be included in either the Executive's W-2 earnings statements or 1099
statements. The Corporation may withhold from any amounts payable under this
Agreement such federal, state or local taxes as shall be required to be
withheld pursuant to any applicable law or regulation, as well as any other
deductions consented to in writing by the Executive.
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(e) This Agreement, including its attached Exhibits,
contains the entire understanding of the Corporation and the Executive with
respect to the subject matter hereof. No agreements or representations,
oral or written, express or implied, with respect to the subject matter
hereof have been made by either party which are not set forth expressly in
this Agreement and its attached Exhibits.
(f) The employment of the Executive by the
Corporation or its subsidiaries or affiliates may be terminated by either
the Executive or the Corporation or its subsidiaries or affiliates at any
time and for any reason. Nothing contained in this Agreement shall affect
such rights to terminate; provided, however, that nothing in this Section
9(f) shall prevent the terms and provisions of this Agreement from being
enforced in the event of a termination described in Section 4(a).
(g) Whenever used in this Agreement, the masculine
gender shall include the feminine or neuter wherever necessary or
appropriate and vice versa and the singular shall include the plural and
vice versa.
(h) This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of
which together will constitute one and the same instrument.
IN WITNESS WHEREOF, the Executive has hereunto set his hand and
the Corporation has caused these presents to be executed in its name on its
behalf, and its corporate seal to be hereunto affixed and attested by its
assistant secretary, all as of the day and year first above written.
---------------------------- ----------------------------
Witness Executive
---------------------------- ----------------------------
Witness Social Security Number
ATTEST: RYDER SYSTEM, INC.
(the "Corporation")
By:
---------------------------- ------------------------
Assistant Secretary Executive Vice President
(Seal)
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Severance Agreement
EXHIBIT A
RELEASE AGREEMENT
FOR AND IN CONSIDERATION OF THE PAYMENT TO ME OF THE SEVERANCE BENEFITS
PURSUANT TO THE SEVERANCE AGREEMENT BETWEEN RYDER SYSTEM, INC. ("RSI") AND ME
DATED ________________, 19__ (THE "SEVERANCE AGREEMENT"), I, (Executive's
Name), ON BEHALF OF MYSELF, MY HEIRS, SUCCESSORS AND ASSIGNS (COLLECTIVELY "I"
OR "ME"), HEREBY RELEASE AND FOREVER DISCHARGE RSI AND ALL OF ITS SUBSIDIARIES
AND AFFILIATES, THEIR AGENTS, EMPLOYEES, OFFICERS, DIRECTORS, SUCCESSORS AND
ASSIGNS (COLLECTIVELY THE "CORPORATION"), FROM ANY AND ALL CLAIMS, DEMANDS,
ACTIONS, AND CAUSES OF ACTION, AND ALL LIABILITY WHATSOEVER, WHETHER KNOWN OR
UNKNOWN, SUSPECTED OR UNSUSPECTED, FIXED OR CONTINGENT, WHICH I HAVE OR MAY
HAVE AGAINST THE CORPORATION AS A RESULT OF MY EMPLOYMENT BY AND SUBSEQUENT
TERMINATION AS AN EMPLOYEE OF THE CORPORATION, UP TO THE DATE OF THIS
AGREEMENT. THIS INCLUDES BUT IS NOT LIMITED TO CLAIMS AT LAW OR EQUITY OR
SOUNDING IN CONTRACT (EXPRESS OR IMPLIED) OR TORT ARISING UNDER FEDERAL, STATE,
OR LOCAL LAWS PROHIBITING AGE, SEX, RACE, DISABILITY, VETERAN OR ALL OTHER
FORMS OF DISCRIMINATION (INCLUDING THE AGE DISCRIMINATION IN EMPLOYMENT ACT,
THE AMERICANS WITH DISABILITIES ACT OF 1990 AND TITLE VII OF THE CIVIL RIGHTS
ACT OF 1964, AS AMENDED) OR CLAIMS GROWING OUT OF ANY LEGAL RESTRICTIONS ON THE
CORPORATION'S RIGHT TO TERMINATE ITS EMPLOYEES.
This Agreement does not release the Corporation from any of its current,
future or ongoing obligations under the Severance Agreement, specifically
including but not limited to cash payments and benefits due me.
I understand and agree that this Agreement and the Severance Agreement
shall not in any way be construed as an admission by the Corporation of any
unlawful or wrongful acts whatsoever against me or any other person, and the
Corporation specifically disclaims any liability to or wrongful acts against me
or any other person.
I agree that the terms and provisions of this Agreement and the Severance
Agreement, as well as any and all incidents leading to or resulting from this
Agreement and the Severance Agreement, are confidential and that I may not
discuss them with anyone without the prior written consent of RSI's or its
successor's Chief Executive Officer, except as required by law; provided,
however, that I agree to immediately give RSI or its successor notice of any
request to discuss this Agreement or the Severance Agreement and to provide RSI
or its successor with the opportunity to contest such request prior to my
response. Additionally, I agree that during the Severance Period (as defined
in the Severance Agreement), I shall not make any remarks disparaging the
conduct or character of the Corporation and that I will cooperate with the
Corporation, at no extra cost, in any litigation and administrative proceedings
(e.g. EEOC charges) involving any matters with which I was involved during my
employment with the Corporation.
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This Agreement shall be governed by and construed in accordance
with the laws of the state of Florida, without reference to principles of
conflict of laws. This Agreement may not be amended or modified otherwise
than by a written agreement executed by RSI and me or our respective
successors and legal representatives.
The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other
provision of this Agreement.
I UNDERSTAND AND ACKNOWLEDGE THAT I HAVE SEVEN (7) CALENDAR DAYS
FOLLOWING MY EXECUTION OF THIS AGREEMENT TO REVOKE MY ACCEPTANCE OF THIS
AGREEMENT AND THAT THIS AGREEMENT SHALL NOT BECOME EFFECTIVE OR ENFORCEABLE
UNTIL THE REVOCATION PERIOD HAS EXPIRED.
I CERTIFY THAT I HAVE FULLY READ, HAVE RECEIVED AN EXPLANATION OF, HAVE
NEGOTIATED AND COMPLETELY UNDERSTAND THE PROVISIONS OF THIS AGREEMENT, AND
THAT I HAVE BEEN ADVISED BY THE CORPORATION THAT I SHOULD CONSULT WITH AN
ATTORNEY BEFORE SIGNING THIS AGREEMENT. I FURTHER CERTIFY THAT I HAVE HAD
ADEQUATE TIME TO REVIEW AND CONSIDER THE PROVISIONS OF THIS AGREEMENT AND
THAT I AM SIGNING THIS AGREEMENT FREELY AND VOLUNTARILY, WITHOUT DURESS,
COERCION OR UNDUE INFLUENCE.
Dated this ____ day of _________________, 19__.
---------------------------- ----------------------------
Witness Executive
---------------------------- ----------------------------
Witness Social Security Number
Executive's Date of Termination:_____________________
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STATE OF ____________)
) ss:
COUNTY OF ___________)
Before me personally appeared __________________, to me well known and known to
me to be the person described in and who executed the foregoing instrument, and
acknowledged to and before me that he/she executed said instrument for the
purposes therein expressed.
WITNESS my hand and official seal this _____ day of ______________, 19__
----------------------------
Notary Public
Commission Expires:
- ------------------------------- (Seal)
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Severance Agreement
EXHIBIT B
Resignation Letter
TO THE BOARD OF DIRECTORS
OF RYDER SYSTEM, INC.
Gentlemen:
Effective immediately, I hereby resign as an officer and/or director of
Ryder System, Inc. and/or its subsidiaries and affiliates and, to the
extent applicable, from all committees of which I am a member.
Sincerely,
----------------------------
Executive's Name
----------------------------
Date
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